Never be Results Oriented

Video Transcription:

Hello, traders. Welcome to the Pro Trading Course and the second module, A Pro Trader’s Mindset. In this lesson, we are going to learn one of the most important things that you should know and you should practice before becoming a professional trader. And it doesn’t matter if you’re trading forex options, stocks, or futures. You should never be results-oriented, all right?

And when I’m talking about results-oriented, I’m not talking about your overall results as a trader or your profitability as a trader. I’m talking about focusing on the outcome of every single trade. Now, being results-oriented means focusing on the results of every single trade. And focusing on the results of every single trade will make controlling your emotions even harder.

And if you can’t control your emotions, you are going to be perhaps revenge trading, chasing the market, and making decisions under duress. And when you’re trading professionally, you should have a cool head in front of your charts. And not only that, but you are going to miss the optimal point of view, which is the overall growth of your equity. And this is what we focus on. We don’t focus on winning or losing one trade or another, or what’s going to happen after a losing streak.

We focus on the overall growth of your equity because the main goal of becoming a professional trader is to make money out of the markets. The outcome of one single trade will not determine if you are truly a profitable trader or not. You have to look at a big sample size of your trades. This means that it’s impossible to know if you are profitable just by looking at one trade or if you’re not profitable just by looking at one loss.

You have to look at a big sample size. And when I’m talking about a big sample size, I’m talking about hundreds and hundreds of trades under your trading system or your trading strategy. Focusing on one win or one loss is narrow-minded and not objective at all. So, we are going to get rid of that feeling and that way of thinking and we are going to be focusing on what’s important. And by looking at the big picture, you will focus on what really matters, your maximum drawdown periods.

And this is very crucial. If you focus on one or two trades and not look at the overall picture, you might be focusing on trades that are under a losing streak and you might think that you are not profitable in the overall run when you probably are. But you’re just looking at three or four trades that didn’t go your way, and that’s just called a losing streak.

Now, let’s look at this account. This is what a real trading account looks like. Now, here we are risking 1% of the account and we are using a one to three risk-to-reward ratio. This means that every time we have a losing trade, we lose 1% of the equity or the account, but when we win, we win three times what we risked. And as you can see here, we have 20 trades, and we have 11 losses, and we have 9 wins.

But because we are using our very strict money management rules, we are able to overcome our losses, and because we know that we only take high probability setups at a one to three risk-to-reward ratio, we are going to overcome our losses. And after 20 trades, this account grew 16.82%, which is amazing given the fact that we had a four-trade losing streak right here. Now, this is what I’m talking about. If you focus on these four trades, you are going to think…

I mean, if you focus on these four trades, just don’t look at the overall picture, you are going to think that your system or your strategy is a losing strategy, when in fact your strategy is a winning strategy because you don’t mind taking small losses here and there. Because when you win, you win big.

And this is what professional trading is all about. And I’m just talking about the mindset and the emotional aspect of trading. In this course, we are going to teach you how to look for these high probability trades that would yield these kinds of results. Now, after we see the big picture, and not focus on these small losing streaks, I’m going to show you what the equity curve looks like.

This is the equity growth of that account that we just looked at. And, as you can see, we started on the negative side, but overcame those negative trades or those losing trades by this winning streak. And then we kind of chopped in the middle of this range before having this drawdown. And this is another thing that you need to focus on, keeping your drawdowns small.

And the reason is that, the bigger the drawdown, the more difficult it’s going to be for you to get out of them. And in this case, you can see that from this peak to this valley, our maximum drawdown was only 3.94% of our equity. And then we made a surge and overcame the drawdown by being disciplined and trusting our system. And as you can see, we are actually profitable in the long run.

We don’t focus on these small losses. We focus on the overall picture. And by focusing on the overall picture, you can truly see if you are profitable or not. If your equity growth goes the other way around or to the south side or your drawdowns are mid-double digits, then you need to adjust your strategy. You don’t focus on one or two single trades, you focus on the overall equity curve.

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